FTC finds popular kids apps collect data without telling parents

This handout image provided by the Federal Trade Commission shows the cover of the FTC's "Mobile Apps for Kids: Disclosures Still Not Making the Grade" guide. The Federal Trade Commission is investigating an unspecified number of software companies that make cellphone apps to determine whether they have violated the privacy rights of children by quietly collecting personal information from their phones then sharing it with advertisers and data brokers, the agency said Monday. Such apps can capture a child's physical location, phone numbers of their friends and more. (FTC)

SETTING THE RECORD STRAIGHT (publ. 1/8/2013, page A2) A story about a U.S. antitrust investigation of Google incorrectly reported Microsoft's role with the Association for Competitive Technology. While Microsoft is a longtime financial sponsor of the trade group, which has often allied itself with Microsoft's policy views, it is not a co-founder. That incorrect characterization also appeared in a Dec. 11 article and a July 29 column.

Many of the most popular mobile games and apps for children are transmitting personal information to advertisers and marketing firms, often without parents' knowledge, the government said Monday in a report that regulators seem likely to use in making the case for tough new rules on Internet services aimed at kids.

Based on a survey of apps found in the Apple (AAPL) and Google (GOOG) online stores, the Federal Trade Commission said it has launched investigations to determine whether some apps are violating federal laws that prohibit deceptive business practices and require online services to obtain parents' permission before collecting identifying information from children under 13. Violators could face federal lawsuits, court orders or fines.

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The report comes as the agency is nearing a decision on whether to toughen its rules for protecting children's privacy online. While some watchdogs say the proposed rule changes are overdue, major Internet and entertainment companies argue the new regulations would impose unreasonable or disruptive requirements.

Without commenting on the proposed changes, FTC Chairman Jon Liebowitz made it clear in a statement that he is concerned about the study's findings.

"Our study shows that kids' apps siphon an alarming amount of information from mobile devices without disclosing this fact to parents," Liebowitz said of the report, which found 59 percent of the apps tested by FTC staffers were transmitting information back to developers or ad agencies.

Often, the information includes a digital code that identifies the device on which an app is being used. A small number of apps also shared precise information about the user's physical location and phone number.

FTC officials said advertisers or marketing firms can draw information from different apps to compile extensive profiles on a child's interests or habits, even without knowing the child's name, and then deliver personalized messages to kids without their parents' knowledge or consent.

More than half the apps in the study show ads to users, while some allow users to make online purchases or connect to social networks, often without disclosing those facts to users or parents before they download the app onto a tablet or mobile phone, the FTC said.

The study touches on concerns the FTC and other agencies have raised before. "While we think most companies have the best intentions," Liebowitz added, "all of the companies in the mobile app space, especially the gatekeepers of the app stores, need to do a better job."

Google said Monday that it will review the report, while noting that it already requires developers to disclose what information their app will access and to obtain user approval before the app can be downloaded. Apple did not respond to a request for comment.

In its report, however, the FTC said the standard disclosures provided for apps in the Android and Apple stores "do not provide parents with the information they need to make informed choices about the apps their kids use."

The FTC said only 20 percent of the apps in its survey provide access to explicit privacy policies. Some were dense and difficult to understand, and some were incomplete or misleading, according to the report.

For its study, the FTC said it used the keyword "kids" to search for apps in both the Google and Apple stores, then selected 200 apps from each platform. Commission staffers downloaded those apps and tested to see what kinds of information they transmitted.

Officials declined to single out apps by name. "We think this is a systematic problem," said FTC associate director Jessica Rich. "We don't want people to think that if they just avoid certain apps, they're home free."

One organization of developers quibbled with the report's findings while saying it shows the industry must educate developers about privacy issues.

The vast majority of apps are created by "first-time developers" and small startups "that do not have legal departments or privacy experts on staff," said a statement by the Association for Competitive Technology, which was founded by Microsoft and also represents smaller developers.

Privacy watchdogs said the study shows the need for broader rules and enforcement. "This report reveals widespread disregard for children's privacy rules," said the nonprofit Center for Digital Democracy.

The FTC is expected to decide this month whether to add more categories of data to the list of information that online operators can't collect from kids under 13 without parents' permission.

Along with the investigations announced Monday, Leibowitz said the commission will continue monitoring the industry as a whole. He added, "We expect to see improvement."

Contact Brandon Bailey at 408-920-5022; follow him at Twitter.com/BrandonBailey.

Report on kids apps

Some of the FTC's findings:20 percent of the apps in the study display privacy policies.59 percent send data to the app developer, an advertising network or analytics service.58 percent show ads, although only 15 percent disclosed their use of ads before they were downloaded.17 percent allow kids to make online purchases for up to $30.Source: Federal Trade Commission

TIPS for parents

Try out apps before your child uses them.Use settings in app store or app itself to limit a child's ability to make purchases or other downloads.Set device on "airplane mode" to disable interactive features when a child is using an app.Look for privacy policies or other statements and if you're not satisfied, choose another app.Check whether the app connects to social networks, gaming platforms or other services.Talk to your kids about information they should or shouldn't share online.Source: Federal Trade Commission